California Payroll: How Your Agency Can Easily Calculate Overtime Pay

May 20, 2021

California payroll is unique. As a result, a number of agencies have to manually calculate overtime pay rates as often as every two weeks. Spending most of your day manually calculating overtime sounds like a nightmare. Thus resulting in agencies being stressed about correct pay rates, and pulled away from day-to-day activities.

It’s important that software provides automated calculations for the overtime pay rates, and let agencies focus instead on quality patient care.

California Overtime Pay

In the state of California, agencies pay their clinicians daily and weekly overtime pay.

Some examples of California payroll complexities are they require weekly and daily overtime pay as well as averaging overtime rate calculations which we will cover later. 

Daily overtime: If a clinician works more than 8 hours in a day, they are granted time and a half pay (1.5X) for the 9th and later hours. 

Weekly overtime: If a clinician works more than 40 hours a week, they are granted time and a half pay. 

Double Time: If a clinician works more than 12 hours in a single workday OR more than 8 hours during the 7th day of work in a week, then Double Time is required. 

There are often significant differences in pay rates by payor, service, and patient. Clearly, agencies need software that helps them calculate pay rates based on individual state’s Department of Labor regulations. 

Calculating California’s Overtime Pay Rates

A clinician has multiple shifts during the week and their pay rates are factored into the patients they’ve seen, and the services performed. 

The clinician has pay rates of $10/hr., $15/hr., and $25/hr. In addition, the clinician worked a 60-hour workweek at 15 hours, 25 hours, and 20 hours respectively, and in order of service dates.

  • 15 hr x $10/hr = $150
  • 25 hr x $15/hr = $375
  • 20 hr x $25/hr = $500
    • $150 + $375 + $500 = $1,025
    • $1,025/60 = $17.08 (Weighted Avg Pay Rate)
    • $17.08 x 1.5 = $25.63 (Weighted Avg O/T Rate)
    • $25.63 x 20 hours of OT = $512.50 
  • 40 hour work week = $150+$375 = $525
  • Total Pay for the week = $1,037.50

A more common way to pay O/T would only count the pay rate incurred when the weekly hours exceeded 40 hours. In the above example, the last 20 hours were paid at $25/hour which would require the agency to pay a $37.50/hour O/T rate for those hours, vice the California Weighted Average O/T rate of $25.63.

California Weighted O/T Pay Rate More common O/T Rate

 

$25.63/hour 

 

$37.50/hour

This California-required calculation will also result in having to pay the employee a higher rate depending on the actual scenario. The key takeaway here is that the calculations are indeed complex. If your software can’t do this for you how are you ever going to manage this? 

How KanTime Handles California Payroll and Overtime Calculations 

 Referencing the example above, how frustrating would it be to do those calculations manually every two weeks. There are bound to be mistakes, and the potential for a clinician to receive the wrong amount on their paycheck. This then results in significant wasted man-hours, canceling checks, and recalculating payroll. 

KanTime is How Better Happens. 

  • KanTime is configurable to automatically calculate complex pay rates for every state including California.
  • KanTime is configurable by payor and service to apply the appropriate base rates once schedules have been completed. 
  • Pay rates can be adjusted on the fly, on an individual basis, or configured in the clinician record by patient, service, payor or any combination of the three.
  • KanTime accurately measures the service times based on the recorded login and logout times. Cures Act compliant EVV is available for States and services that require it.
  • Adjustments can be made by those with appropriate role permissions both before and after timesheet approval.
  • Once the timesheets are approved, KanTime handles these complex calculations and can format an export to any one of 35 payroll vendors so the agency can complete their payroll right, the first time.

Having an EMR that automates the complex calculations of employee payroll is key to agency profitability and staff satisfaction. With KanTime, agencies can now focus on their day-to-day tasks in support of quality patient care.

For more information on KanTime, and how we handle overtime pay rates check out our website or request a demo.

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